ABILENE, Kan., April 24, 2007 (PRIME NEWSWIRE) -- Duckwall-ALCO Stores, Inc. (Nasdaq:DUCK), which currently operates 256 retail stores in 21 states, today announced its operating results for the fourth quarter and year ending January 28, 2007.
Net income for the fourth quarter was $4.4 million, or $1.14 per diluted share, compared with a net income of $5.1 million, or $1.33 per diluted share, in the fourth quarter of the prior fiscal year. The decline was attributable to the Company experiencing higher shrink results on the stores inventoried during the fourth quarter. Further, expenses related to inventory service charges, professional fees for Sarbanes-Oxley compliance and stock option expense for FAS 123(R) affected the results for the quarter as compared to the same period a year ago.
Net income year-to-date was $5.7 million, or $1.49 per diluted share, compared with a net income of $1.9 million or $0.47 per diluted share, in the prior fiscal year.
Net sales from continuing operations for the fourth quarter increased 7.4% to $136.1 million, while same-store sales increased 4.6% when compared to 4.5% in the fourth quarter in the prior-year quarter. Year-to-date sales from continuing operations increased 9.7% to $475.3 million, while same-store sales increased 6.0% compared to 3.1% in the prior year.
Gross margin for the fourth quarter was 34.9% compared to 33.4% in the fourth quarter of the prior year. The gross margin percentage for the fourth quarter was affected by a positive LIFO reserve adjustment of $794,000 (0.6%), offset by higher than expected shrink results for stores inventoried in January 2007 and increased the shrink reserve for other stores of approximately $1.1 million (0.8%). During the year, the Company estimated the amount of vendor participation that was attributable to cost of goods sold versus CO-OP advertising; an offset against selling, general and administrative expense; and in the fourth quarter lowered the cost of goods sold by $1.1 million (0.8%) to reflect final amounts attributable to each category.
Year-to-date, gross margin was 31.6% compared to 31.8% in the prior-year. The decrease in gross margin was attributable to a 49 basis points increase in freight which was directly related to fuel costs. Seasonal markdowns for the year exceeded plan and further contributed to the decline in gross margin.
Operating expenses for the quarter were 29.4% compared to 27.2% in the fourth quarter of the prior year of which 70 basis points of the adjustment were due to a reclassification of a portion of vendor participation from CO-OP advertising to cost of goods sold. The increase of $2.3 million was attributable to normal inflation at existing stores and the addition of seven new stores during the year. Professional fees relating to Sarbanes-Oxley compliance affected the quarter as well. Unusual items that affected the selling, general and administrative expenses included an asset impairment charge of $130,000, inventory service charges of $460,000 from late inventories taken due to the roll out of a new POS system, and stock option expenses of $281,000 related to the stock compensation expense recorded in accordance with FAS 123(R).
Operating expenses for the year were 29.2% compared to 30.0% in the prior-year. The year-over-year increase of $8.8 million is primarily due to inflation and new stores. Other factors affecting expenses were depreciation expense related to the Company's new software systems of $1.5 million, offset by fixed assets that were fully depreciated; stock option expense of $821,000 from the adoption of FAS 123(R); professional fees related to Sarbanes-Oxley and annual audit of approximately $1.1 million; incremental expenses related to the implementation of the previously announced IT initiative of $749,000, offset by an increase in vendor CO-OP participation.
Stock Buyback Program Update
The Company previously announced that the Board of Directors had approved the repurchase of up to 200,000 shares of common stock. During the year ended January 28, 2007, the Company repurchased 3,337 shares at an average price of $30.46. There are 196,663 shares still authorized to be repurchased.
Store Operations Update
The Company opened seven new ALCO stores during the year ended January 28, 2007, located in Kansas, Texas, Iowa and Nebraska, and closed one location in Ohio. The location in Nebraska replaces a Duckwall store that was closed. The Company opened its 190th ALCO store on April 12, 2007 and closed one Duckwall store on April 22, 2007.
Investor Conference Call
The Company will host an investor conference call at 3:00 p.m. central daylight time on April 24, 2007 to discuss operating results in greater detail for the quarter and year ended January 28, 2007. The dial-in number for the conference call is 877-502-9274 (international/local participants dial 913-981-5584), and the Confirmation Code is 8784427. Parties interested in participating in the conference call should dial in approximately five minutes prior to 3:00 p.m. central daylight time. A replay of the call will be available two hours after completion from April 24 through May 8 by dialing 888-203-1112 or for international/local callers by dialing 719-457-0820. The Replay Passcode is 8784427.
About Duckwall-ALCO Stores, Inc.
Duckwall-ALCO Stores, Inc. is a regional retailer that specializes in meeting the needs of smaller, underserved communities throughout the central United States. The Company offers an exceptional selection of fashionable merchandise, quality products and recognized brand names at reasonable prices. Our specialty is delivering those products with the friendly, personal service our customers have come to expect. With 256 stores across 21 states, we are proud to have continually provided excellent products at good value prices to our customers for 106 years. To learn more about Duckwall-ALCO Stores, Inc. visit our website at www.ALCOstores.com.
Forward-looking statements
This press release contains forward-looking statements, as referenced in the Private Securities Litigation Reform Act of 1995 ("the Act"). Any forward-looking statements are made by the Company in good faith, pursuant to the safe-harbor provisions of the Act. These forward-looking statements reflect management's current views and projections regarding economic conditions, retail industry environments and Company performance. Actual events or results may differ materially from those described in this press release due to a number of risks and uncertainties. Factors that could significantly change results include but are not limited to: sales performance, expense levels, competitive activity, interest rates, changes in the Company's financial condition and factors affecting the retail industry in general. Additional information regarding these and other factors that could cause actual results to differ materially from those contained in the forward-looking statements set forth in this press release are included in the Company's 10-K and 10-Q filings and other public documents, copies of which are available from the Company on request.
DUCKWALL-ALCO STORES, INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)
Unaudited
Thirteen Weeks Ended Year Ended
-------------------- --------------------
Jan. 28, Jan. 29, Jan. 28, Jan. 29,
2007 2006 2007 2006
-------- -------- -------- --------
Net sales $136,131 $126,710 $475,255 $433,319
88,625 84,378 324,885 295,488
-------- -------- -------- --------
Gross margin 47,506 42,332 150,370 137,831
29831
Selling, general
and administrative 38,108 32,903 132,165 124,208
Depreciation and
amortization 1,873 1,570 6,795 5,940
-------- -------- -------- --------
Total operating
expenses 39,981 34,473 138,960 130,148
Operating income
from continuing
operations 7,525 7,859 11,410 7,683
Interest expense 720 464 2,730 1,272
-------- -------- -------- --------
Earnings from
continuing
operations before
income taxes 6,805 7,395 8,680 6,411
Income tax
expense 2,378 2,257 3,046 1,754
-------- -------- -------- --------
Earnings from
continuing
operations 4,427 5,138 5,634 4,657
Earnings / (loss)
from discontinued
operations, net
of income tax (34) 22 70 (2,708)
-------- -------- -------- --------
Net earnings $ 4,393 $ 5,160 $ 5,704 $ 1,949
======== ======== ======== ========
Per share data
(diluted):
Earnings from
continuing
operations $1.15 $1.32 $1.48 $1.13
Net earnings $1.14 $1.33 $1.49 $0.47
Weighted-average
shares outstanding:
Basic 3,794 3,861 3,792 4,084
Diluted 3,844 3,893 3,828 4,118
Supplemental Data: Thirteen Weeks
Ended Year Ended
Jan. 28, Jan. 29, Jan. 28, Jan. 29,
2007 2006 2007 2006
----------------------------------------
Same Store Sales
change 4.6% 4.5% 6.0% 3.1%
Total customer count
change (1.9%) 3.9% 1.9% 2.3%
Average sale per ticket
change 9.8% 4.3% 7.6% 3.8%
EBITDA:
Income from continuing
operations $4,427 $5,138 $5,632 $4,683
Plus interest 720 464 2,729 1,272
Plus taxes 2,378 2,257 3,049 1,729
Plus depreciation 1,873 1,570 6,791 5,935
Plus 123R stock option
expense 281 -- 821 --
EBITDA from continuing
operations $9,679 $9,429 $19,023 $13,619
Average Annualized New
Store Sale performance
on prototype stores $2,357
Incremental expenses
related to IT
initiative (a) $56 $749
(a) excludes incremental depreciation and additional costs related to
performing SKU level inventories)
DUCKWALL-ALCO STORES, INC.
Consolidated Balance Sheet
(In thousands)
Unaudited
Jan. 28, Jan. 29,
2007 2006
-----------------------
Assets
Current assets:
Cash and cash equivalents $ 2,983 $ 472
Receivables 3,059 2,874
Inventories 151,406 135,077
Prepaid expenses 1,561 2,621
Deferred income taxes 3,037 -
Property held for sale - 585
--------- ---------
Total current assets 162,046 141,629
--------- ---------
Property and equipment 87,484 92,615
Less accumulated amortization 64,451 63,591
--------- ---------
Net property and equipment 23,033 29,024
--------- ---------
Property under capital leases,
net of accum. amortization 6,953 6,861
Other non-current assets 44 55
Deferred income taxes 3,344 1,353
--------- ---------
Total assets $ 195,420 $ 178,922
========= =========
Liabilities and Stockholders' Equity
Current Liabilities
Current maturities of capital
lease obligations $ 2,128 $ 1,879
Accounts payable 35,263 28,300
Income Taxes Payable 1,915 1,163
Accrued salaries and commissions 4,180 6,002
Accrued taxes other than income 4,242 4,743
Other current liabilities 3,634 2,998
Stock purchase payable - 1,910
Self-insurance claim reserve 4,322 3,915
Deferred income taxes - 86
--------- ---------
Total current liabilities 55,684 50,996
Notes payable under revolving
loan credit facility 21,077 17,062
Capital lease obligations,
less current maturities 6,783 7,299
Deferred gain on leases 5,372 1,132
Other noncurrent liabilities 444 286
--------- ---------
Total liabilities 89,360 76,775
--------- ---------
Stockholders' equity
Common Stock, $.0001 par value,
authorized 20,000,000 shares
in 2007 and 2006; issued and
outstanding 3,794,303 and
3,786,953 shares in 2007 and
2006, respectively 1 1
Additional paid-in capital 37,315 36,411
Retained earnings 68,744 65,735
--------- ---------
Total stockholders' equity 106,060 102,147
--------- ---------
Total liabilities and
stockholders' equity $ 195,420 $ 178,922